Shares of data analytics and automation platform Alteryx jumped 5.25% in the morning session after Morgan Stanley analyst upgraded the stock's rating from Equal-Weight (Neutral) to Overweight (Buy), citing the company's attractive valuation and growth potential. The analyst noted that Alteryx is a leader in data analytics (more precisely, in the self-service data integration space), and it is aiming to expand its reach. The analyst believes that Alteryx's valuation is undemanding and, combined with its potential strategic value, provides a reasonable risk/reward scenario.
At a Piper Sandler conference in September 2023, Alteryx provided some insights into some of the growth potentials and opportunities highlighted by the analyst. During the conference, Kevin Rubin, the CFO of Alteryx, discussed the company's plans for generative AI (Gen AI). He believes that Gen AI has the potential to be disruptive and that Alteryx is well-positioned to help customers leverage it. Rubin noted that Alteryx is currently working on two main areas: multimodal, which allows different levels of sophistication to interact with models and the model building process; and responsible and ethical deployment of large language models in organizations. Rubin also discussed the outlook for the business and the company's plans to return to profitability. He believes that AI automation has the potential to help lower costs.
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What is the market telling us:
Alteryx's shares are quite volatile and over the last year have had 30 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago, when the stock gained 17% on the news that Reuters reported that the company is working with an investment bank to explore a potential sale. The report noted that Alteryx is being advised by investment bank Qatalyst Partners amid the discussions with potential acquirers. While initial interest has been expressed, Alteryx's valuation expectations still need to be met, raising the possibility that discussions might conclude without a deal, Reuters added. An acquisition in SaaS could be a good signal for the whole industry, as it shows there are constructive views on both fundamentals and valuation.
Alteryx is down 25.9% since the beginning of the year, and at $36.89 per share it is trading 46.9% below its 52-week high of $69.52 from February 2023. Investors who bought $1,000 worth of Alteryx's shares 5 years ago would now be looking at an investment worth $627.99.
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